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Gray Matters: For many, retirement means working

Just how much the Great Recession reshaped what many baby boomers thought retirement would look like is becoming clearer: More than ever they now expect to retire later or work when they're "retired."

In 1991, just one in 10 workers told the Employee Benefit Research Institute that they planned to wait to retire until they were older than 65. By 2007, three in 10 said that.

This year? More than four in 10.

Boomers cruising toward a traditional retirement suffered a financial comeuppance in the prolonged economic slump that began in late 2007. The downturn sapped jobs, stock and housing values, and interest on savings.

Many were also caught in the shift from defined-benefit pension plans to 401(k) plans that required workers to contribute toward their own retirement savings. Some didn't, a choice that will leave them short financially.

Small wonder that, according to the Pew Research Center, boomers are the gloomiest of all age groups about the health and future of their finances. Boomers were more likely than other age groups to tell Pew researchers that they lost money on investments since the recession hit. Nearly six in 10 said their household finances worsened.

Finally, employment-based health insurance for many retirees has been withering away, which is causing older workers to cling to paychecks.

Overall, the stage is set for a new normal: Working in retirement.

That suits William Brockman just fine. The 65-year-old working retiree began a new job this year at a child care center in Overland Park, Kan., where he delightedly calls himself "a shepherd to flocks of children" four days a week.

Brockman worked for the federal government for 33 years, leaving at age 59. But he soon found he needed to better his financial situation and have more contact with people.

"I truly believe the more active one stays, both mentally and physically, the better the quality of life," Brockman said.

So his first post-retirement job was as a grocery store courtesy clerk. When that ended, he jumped at the day care center opportunity "in order to have more income, and I found that in retirement every day is Saturday, so to speak. Now my days are special."

The number of older workers has grown more rapidly than any other age group in the last few years. This year, 18.6 percent of those 65 and older were participating in the labor force, compared with 13 percent in 2002.

At the same time, older workers represent a disproportionately large share - 40 percent - of people who have been trying to get back into the work force for at least a year.

The scramble for re-employment is made more desperate for some who fight age discrimination and outdated skills.

"The prospects are dim for older workers who lose their jobs," said Christine Owens, executive director of the National Employment Law Project. "They have the highest rates of long-term unemployment of any age group."

The unemployment rate of 55-and-older workers jumped from 3 percent at the end of 2007 to 7.4 percent in 2010 and settled at 6 percent earlier this year.

Among the 65-and-older group, the jobless rate, which for years was 3 percent to 4 percent, pushed above 7 percent in 2010 before edging down to 6.5 percent this year.

Demographers warned for years about social and economic stress when baby boomers began "retiring in droves." After all, boomers - representing slightly more than one-fourth of the U.S. population - are hitting age 65 at the rate of 10,000 a day. One in every four 65-year-olds today will live past age 90, and one in 10 will live past 95.

That's a long time to be retired. And it's guaranteed to stress the Social Security and Medicare systems. Younger age groups, needed to keep paying into the system, aren't as big as the boomer group that will draw benefits in ever-greater numbers.

Still, the prototypical retirement reigns in America.

As the nation's largest generation noses toward Medicare eligibility at age 65 and full Social Security benefits at age 66, about two-thirds of the boomers are continuing a long-standing trend of "early" retirement before they reach those landmarks.

Their homes are paid for, they have money in the bank and they are realizing their leisure plans. They're happy to say goodbye to their jobs.

The Employee Benefit Research Institute finds that today's near-retirees are more likely than ever before to expect to continue working for pay beyond their "official" retirement.

Those expectations are a stark contrast to the actual work experience of already-retired Americans. While about seven in 10 current workers say they expect to work for pay in retirement, only about two in 10 current retirees have actually drawn paychecks since they retired.

And about that 401(k): It plays a big role in boomers' retirement plans.

Retirement analysts say the evolution from defined-benefit pensions, paid for by employers, to 401(k) accounts, built by employee and employer contributions, has worked against any trend toward earlier retirement. That's because 401(k) accounts simply haven't grown as big as advised or don't exist at all.

Social Security remains most boomers' hope for retirement income. On average, U.S. workers are beginning to take their Social Security benefits at age 63.8. That average fell by more than five years between 1945 and 1970. After that, though, the average has stayed fairly stable, noted Monique Morrissey, an economist who wrote "The Myth of Early Retirement" last year.

But Morrissey cautions against measuring "retirement" by Social Security take-up rates alone. Forty-five percent of eligible Social Security households continue to earn money from a job or jobs.

It's a fact of life, though, that about one in three people becomes disabled before retirement.

Many boomers, like generations before them, are finding that their intent to continue working is foiled by health - physical or mental.

According to the "MetLife Study of Baby Boomers at 65," published this spring, four in 10 of the 65-year-olds questioned in a random survey who had stopped working sooner than they planned did so because of health reasons.

That was more than twice the rate of those who retired earlier than planned because of job loss or other job-related reasons.

Thinking about retirement

. There is no "best age" for retirement. It depends on your current cash needs, your health and family longevity, whether you plan to work in retirement, your other income sources and expected future needs, and the lifetime amount you expect from Social Security.

. If you live an average lifespan for your age, you'll get about the same lifetime benefits whether you get smaller benefits for a longer period after you take early retirement or you get higher monthly payments over a shorter time if you delay benefits until your official retirement age or later.

. When you reach your full retirement age, you can work and earn as much as you want and still get your full Society Security monthly payment. If you retire early and earn more than a set limit, some of your benefits will be withheld, but the withheld money will be reflected in higher monthly benefits when you reach full retirement age.

. Even if you intend to continue working, you should sign up for Medicare three months before you turn 65.

. The age to receive full Social Security benefits is 66 for boomers born between 1943 and 1954. After that, it rises by two months for each birth year until it reaches 67 for those born in 1960 or later.

Source: Social Security Administration

Americans at 65?A picture of older baby boomers in 2012:

. 45 percent: Are fully retired.

. 37 percent: Retired earlier than planned.

. 36 percent: Retired when and because they wanted to.

. 63 percent: Have started receiving Social Security benefits.

. 26 percent: Said they have no concerns about retirement.

. 58: Average age of those who said they were fully retired.

. 68.5: Average expected retirement age for those who are still working.

. 79: Average age they say they'll feel old.

Source: MetLife Mature Market Institute, 2012 study, "Transitioning into Retirement"